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Boeing Company
Student Name
Lecturers Name
Institution
Course
Date
Boeing Company
Profit Ratios
Gross Profit margin
Boeing experienced an increase in its gross profit margin in 2016,2017 and 2018. In 2016, the gross profit margin stood at 15.5%, a 6.1% increase. In 2017, the gross profit margin increased to 18.5%, representing a 19.6% increase. Finally, in 2018, the corporation’s gross profit margin stood at 19.4%, a 5% increase (Finbox, 2021). It’s also worth noting that the gross profit margin for the corporation’s years, indeed between 2016 and 2020, averaged 11.3%. Regardless, the corporation’s gross profit margin ratio reduced from 2018 to 2019, and it also deteriorated from 2019 to 2020. In 2019, the gross profit margin decreased to 6.2%, a -68% depreciation, and in 2020, it reduced to -2.9%, which was a -166.7% reduction.
Net Profit Margin
Boeing’s net profit margin between 2016 and 2020 averaged 11.3%. The peak of net profit margin was seen in 2018, where it stood at 19.4%. In 2016, the corporation’s NPM stood at 15.5%, representing a 6.1% increment. In 2017, the NPR food at 18.5% representing a 19.6% increment while in 2018, it stood at 19.4% representing a 5% increase (Finbox, 2021). The net profit margin decreases in the 2019 and 2020 financial years. In 2019, the NPM stood at 6.2% representing a -68% decline while in 2020, it stood at -2.9% representing a -146.7% decline.
Return on Assets
The corporation’s return on assets for the five years between 2016 and 2020 averaged 2.8%. It’s worth noting that Boeing’s return on assets was at its peak in 2018, where it stood at 9.1%. However, the ratio hit an all-time low of -8.4% in 2020. Based on the corporation’s financial records, in 2016, the return on assets stood at 5.5%, a -1.2% depreciation (Finbox, 2021). In 2017, the ROA ratio increased to 8.4%, representing a 53.1% increase, while in 2018, the ROA stood at 9.1%, representing an 8.1% increase. However, in the 2019 financial year, the ROA stood at -0.5%, a -105.6% decline. In 2020, the ROA stood at -8.4%, representing a 1549% increment.
Return on Equity
The corporation’s return on equity has ranged between 23% and 314% between 2016 and 2020. It’s worth noting that Booking has the highest return on equity compared to its peer groups, such as Lockheed Martin Corporation, General Dynamics Corporation, and Northrop Grumman Corporation, which are aerospace corporations in the civilian and defense industries (Finbox, 2021).
Most Profitable Segment
Boeing offers service, support, and design for autonomous systems, human space exploration systems, satellites, and military aircraft. Based on its return on equity ratio, it is evident that this is its most profitable segment (Finbox, 2021). Revenue generated from this segment has steadily grown since 2016, and reports demonstrate that Boeing Defense Space and Security contributed over 28% of the total revenue in the 2019 financial year (Forbes, 2021). In the second quarter of 2019, the corporation experienced an increase in BDS revenue to 41%. The BDS segment has been the steadiest, probably since Boeing provides unparalleled market support for its fleet. It is worth noting that the segment was introduced in 2016 and has since experienced continued growth. Above all, Boeing continues innovating and expanding the BDS segment to meet its client’s needs and preferences.
Boeing SWOT Analysis
Boeing corporation operates globally and has over 150,000 employees. The corporation is a market leader in the technology, defense, aviation, and aerospace sectors, and it offers its products and services to federal governments in over 150 countries and commercial airlines (Momin, 2021). The corporation’s product line includes; information systems, performance-based training, logistics, a launch system, satellites, defense systems, commercial and military aircraft. Given the corporation’s success in the industry, here is its SWOT analysis.
Strengths
Its Supply Chain
Boeing airplanes require over 2 million parts during manufacturing, which involves networking and global partnerships that would ensure product delivery. Boeing has established a solid supply chain that aids in sourcing and supplying materials necessary for manufacturing.
Diversity in Product Range
Boeing’s greatest strength is its ability to deliver various products. The corporation manufactures corporate jets, private jet planes, commercial planes, among other products, giving it an edge over competitors who offer limited products.
Innovation and Leadership
The corporation has built a solid reputation for leadership and product innovation in the defense and aerospace industry. Study reports cite that Boeing invested over $2 billion in research and development in the financial year 2020, which would aid in the improvement of its product and service range (Momin, 2021).
Solid Market Share
Study reports suggest that the corporation is the second-largest aerospace corporation, and this is after being overtaken by archival Airbus. The corporation has a substantial market share given its influence and economies of scale (Momin, 2021). Also, the corporation receives billions of dollars’ worth of contacts and has diversified its product and services, which enables it to develop a substantial market share,
Weaknesses
Poor Labor Management
Considering the vast task force, the corporation finds it hard to manage them since they are spread worldwide. It’s also challenging to maintain consistency in the set standards given the considerable task force.
Increased Debt Levels
Study reports suggest that Boeing corporation experiences continuous regulatory approval delays for the 737 airplanes. They have 77 inventories, and the COVID-19 pandemic has affected them, increasing its debts from $10 billion to $82 billion as of 2020.
Over-Reliance on Outsourcing
Boeing imports most of its components and raw materials from foreign nations, creating supply chain problems.
Opportunities
Adopting Environmentally Friendly Technology
The corporation can reduce its carbon footprint by adopting environmentally friendly technologies, which could enhance its brand image. The corporation has recently tested new technology that could reduce harmful emissions and noise pollution. Such initiatives could improve the company’s image.
Space Forces
The recent launch of the Space Forces creates an opportunity for Boeing to be the US government’s main contractor (Ravi, 2020). However, they must compete with Northrop Grumman and Lockheed Martin to secure the position.
Increased Demand for Products
There has been a soaring demand for satellite technologies, and this provides an opportunity for the corporation to develop new and advanced products to satisfy the market demand.
Threats
The Covid-19 Pandemic
The recent Coronavirus pandemic has affected local and international traveling, reducing business for most airlines. If the pandemic persists, some airlines could go bankrupt, affecting Boeing’s manufacturing and income.
Increased Competition
Boeing continues to face increased competition from the likes of Airbus. The competitors threaten Boeing’s customer base, and they threaten its market share dominance.
Damaged Public Image
The recent Boeing airplane fatal accident damaged the corporation’s image (Momin, 2021). Some people have developed air traveling phobia, given the recent terrorist and airplane hijacking events that have damaged their perceptions.
Recommendations
The corporation’s SWOT analysis demonstrates several scopes that it should address to perform better and retain its market lead. As such, the management should consider lowering the cost of producing airplanes to meet that of competitors. The corporation should consider offering discounts to loyal clients to compete with Airbus, who have taken the market lead. It’s also essential to address the soaring demand for satellite technologies since this is an opportunity for the corporation to develop new and advanced products to satisfy the market demand. Above all, Boeing should address production challenges by sourcing raw materials from trusted suppliers to ensure successful product delivery.
References
Forbes. (2021). Retrieved 5 December 2021, from https://www.forbes.com/sites/greatspeculations/2020/01/02/how-much-of-boeings-revenues-comes-from-the-us-government/?sh=26584c7a5144
Finbox. (2021). Retrieved 5 December 2021, from https://finbox.com/NYSE:BA/explorer/gp_margin
Momin Abdul. (2021). Retrieved 5 December 2021, from https://pestleanalysis.com/boeing-swot-analysis/
Ravi, A. K. (2020). Reinventing strategic management: An evolutionary perspective. Asian Journal of Management, 11(4), 429-433.
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